Warehouse clubs like a magnet for customers and pulling them away from other traditional retail channels such as supermarkets, department stores, drugstores, office supply stores, consumer electronics etc… All three warehoused club rivals - Costco, Sam’s and BJ’s – have similar strategies: Low prices, low operating costs, geographic expansion – Costco; Sam’s Club concept is to sell merchandise at low profit margins, which means at low prices to members; and BJ’s offers brand-name merchandise at prices that were significantly lower than the prices found at retail, supermarkets, dept. store etc… Costco and Sam’s have similar strategies: * provide items in bulk and at low prices * Most of the items are supplied by
The top three firms have a relationship and power to obtain the viewing rights to screen 2”first-run” films and to do so at a lower price. So more screens allow for more showing times reducing the average cost. There are also financial and risk bearing economies of scale due to the availability o multiplexes, and the ability to bear and manage commercial risks more effectively than smaller independent cinemas, or small chains. These all combine to create a competitive advantage against small firms and being able to win and maintain market share. Price discrimination also shows signs of oligopolistic firm , as prices are set for different genders, age, time, season, due to lack of competition and choice.
A vertical merger would normally benefit less from economies of scale, as it will not receive an advantage from technical economies of scale. On the other hand the horizontal one does. When firms grow but them selves it takes time in order to benefit from economies of scale, but as the companies merge, they become more powerful and can take full
The energy beverage companies are targeting same group of people as Red Bull and it is hard to make significant increase in profit. To make more profit companies should target diverse types of consumers to differentiate your company from the other companies in the same branch. The heavy consumers of energy beverages are consist of males between 12 and 34 ages. In this market is high brand loyalty which means that average consumer is limiting his/her choice to only 1.4 different brands. The convenience stores and supermarkets are the dominant off-premise retail channels for energy beverages.
As known that Costco is focusing on high quality of merchandises at relatively low prices, they have one condition in order to purchase merchandises at low prices, which is number of purchases. For example, to have one product that is cheaper than competitors they have to purchase more from original manufacturers. Therefore, Costco realized that they have to keep the sales volume to be high so they are still able to maintain this advantage. Because of this, they try to keep their slogan in customer minds that Costco has lower prices and they try to same membership money. However, there is a problem that Costco has to deal with is that their profits mostly from its membership fees instead its net income.
Another modest force is competition from rivals. This is only a modest force because Blue Nile has a bigger brand recognition name and economies of scales due to their large size in addition to the high customer loyalty from consumers. However they do have to be wary of the competitors who can easily steal their customers due to no switching costs. The second strongest of the forces has to be buyer power since buyers can switch instantly at no cost, they tend to be well educated in regard to what they want in addition to being very price sensitive . The strongest force they have to deal with is competition from substitutes such as the common retailers like Jared.
A firm utilizing a cost leadership strategy seeks to be the low-cost producer relative to its competitors. A differentiation strategy requires that the firm possess a "non-price" attribute that distinguishes the firm as superior to its peers. Firms following a focus approach direct their attention to narrow product lines, buyer segments, or geographic markets. "Focused" firms will use cost or differentiation to gain advantage, but only within a narrow target market. COST ADVANTAGE
While this is one advantages, Wal-Mart Offers other advantages as well. In addition, Wal-Mart has quality serves. Most stores don’t have good return policy. Wal-Mart’s excellent return policy motivates people to spend more money. In fact it makes them feel
Dyson invests heavily in Chinese and Asian manufacturing in order to make their products more cheaply, so they can maintain profit margins. This emphasis on design in their organizational planning means not as many products go out, but what they do sell they can sell to a specialized market for higher prices. Given the innovation that is present in Dyson’s business strategy, it is quite clear that their strategic capability is high, though their risks can be high as well, due to the experimental and ‘out there’ nature of their products, which may be too daunting for normal consumers. 2 To what extent do you think any of the
Essay 3 When businesses find ways to internalize externalities they can make more money. Discuss why shopping malls charge a low price per square meter to department stores like Galeria Kaufhof, a medium price to stores like H& M, and a high price per square meter to jewelry stores and food vendors. “Externalities are the costs or benefits that affect people who are not directly involved in the production or consumption of a good or a service.” 1Thus, externalities are not limited to the parties participating in the market i.e. to producers and consumers but also affect other people in the society. Externalities cause deadweight loss which can lead to market failure.